Economics

How to get a lover and win at poker

THERE was a time when economics was widely seen as a graph-strewn study of exchange rates, gross domestic product and the like. Tim Harford's 2005 bestseller, “The Undercover Economist”, was a book that has helped shift that perception by bringing the not-so-dismal science to a wider audience.

Mr Harford's second book, “The Logic of Life”, stakes out similar ground. Once again he eschews chalkboard economics in favour of a reader-friendly guide to the economics of everyday life. The result is a fascinating study of how society is shaped by hidden pay-offs and punishments. Compulsive gambling or inflated boardroom pay might seem like madness, but look closer, says Mr Harford, and you find a kind of logic.

The author sees rational calculation everywhere—even, or perhaps especially, in matters of love. Romantic types might say they seek the perfect soulmate but the revealed truth is more prosaic. Marriages are market-based transactions, swayed by supply (what is available) as much as demand (what the heart desires). Men may prefer slim women and women favour tall men, but both will alter their demands in response to market conditions. Suitors settle for what is on offer now, even if plumper or shorter than the ideal, rather than hold out for the perfect partner.

The book surveys shelf after shelf of the economics literature but in such skilful hands it does not feel like a dutiful trip to the library. Economists are often too beguiled by elegant theories, but Mr Harford wisely confines himself to ideas that have been carefully tested against real life. Only thorough research could discern that residents of high-rise buildings are more likely to be victims of crime, because stacked tenants make for poor monitors of the surrounding streets. Even the excellent chapter on game theory has a practical hero: the card player, Chris “Jesus” Ferguson, who applied its lessons to win the poker world championship in 2000.

Mr Harford, who works at the Financial Times, is an amiable guide for the non-specialist reader, neither too lofty nor dumbed-down. The book's tone is breezy, but his command of the subject is such that even a well-schooled economist will discover much that is new. It is not a wonkish tome, but its broad policy prescriptions are clear enough. Since behaviour is governed by incentives, the way to achieve different outcomes is to alter the pay-offs carefully.

One of the merits of “The Logic of Life” is its variety. Subjects range from the terrifying logic of “rational racism” to a cold calculus of divorce rates. If you want to know which poker hands to bluff with, why neighbourhoods with permanent residents have more road crossings or why digital communication makes the world spikier not flatter, Mr Harford's book provides some answers. And it does it all without an exchange-rate graph in sight.